India needs next wave of economic reforms, specially institutional and legal, to meet the aspirations of the people and catch up with the rest of the world, said the Economic Survey.
"In a fast changing world, financial policy has to catch up with the needs of future India that people are aspiring to build," it said.
The second generation of reforms should focus on positive agenda and developing state structures to address market failures.
It further said, "only state can ensure provision of public goods, such as defence, police and judiciary".
The Survey emphasised that only the state can address the problems concerning monopolies, externalities and asymmetric information.
"In an environment of technologically sophisticated and internationalised firms, it requires considerable sophistication on the part of the government to precisely address market failures," the Survey added.
It mentioned that the next wave of reforms will be through strengthening the institutional foundation -- both laws and organisations and taking well designed policy decisions that will enhance clarity, consistency and transparency.
The government started the first generation of reforms in 1991 dismantling central planning and putting an end to inappropriate interventions by government.
